I’d like to try and wake-up trading in the CME options. The CME has allowed electronic posting of option quotes on selected regional contracts (CUS, CHI, LAX and NYM) since 2012 but I am not aware of any sizable trades since a 35-lot in 2014.
However, unlike past efforts to tout the variety of possible trades, I’d like to take a different approach this time. To avoid fragmenting interest, I intend to focus on one contract: the LAXX17 contract. California has been the root of many housing finance innovations, the Nov ’17 expiration provides enough time to hedge potential moves, and I’d like to drag trading, and open interest , into longer-dated contracts. The LAXX17 futures contract has a reasonably narrow bid/ask spread which facilitates narrower bid/ask spread in the options.
I’ve posted indicative outright markets below. Quotes on these contracts are posted on EQuotes and should be visible on Bloomberg. I’m am only showing 1×1 markets to start the process, but would be open to work inside posted quotes for 5×5 trades. As with futures, I’d be happy to post any axes of those looking to share ideas. My experience with contracts that have limited liquidity, is that one needs to tout trading ideas, and this blog can be your platform to trade anonymously.
Also, while all option trading strategies (e.g. straddles, strangles, calendar and bull- and bear-spreads) are theoretically possible, I think that delta-neutral combinations of puts and futures, and bear-spreads (buy higher strike/sell lower strike) are the most promising. Again, I’m willing to consider any such combinations.
I’m working on a longer blog that will address other critical aspects of options (to include thoughts on valuation), but for today, I just want to announce that quotes exist and that an effort is being made to wake-up this product.
Feel free to contact me (email@example.com) if you have any questions or ideas.